Jenni Lukander, head of competition at Nokia, examines merger control regimes through the lens of commercial realities
In 2016 Nokia merged with Alcatel-Lucent in a $17 billion multi-jurisdictional transaction that secured merger clearance from multiple regulators, most notably US and European authorities. In the backdrop of the transaction the mobile market has been at the centre of numerous competition disputes in Europe and elsewhere. Jenni Lukander, who led on the merger control aspects of the Alcatel-Lucent acquisition and currently leads global litigation and competition law at Nokia, here gives her take on competition regimes. She warns of authorities straying too far from core competition issues and the commercial headaches that can be caused by vague rules and arbitrary stop-the-clock reviews.
What are the biggest challenges that consumers in the mobile sector face today from a competition perspective?
I believe the biggest regulatory challenge for consumers today is big data. How it is collected, who controls it and whether we as consumers know and approve of how it is used. Big data may also entail important competition law questions. We understand that using data can bring tremendous opportunities to improve our everyday lives but how do we ensure that is done in a way that brings maximum benefits for consumers?
In my view, the best position would be to open access to data for as many developers as possible to innovate and create solutions. Market structures that limit opportunities to just a few companies may become problematic. As a consumer I am happy to allow access to my data for developers but I want to do so with the confidence that it is safe and that no-one can monopolise it.
What should the key aims of merger control policy be and how important for you are well crafted regulations?
Merger control should ideally be about ensuring that transactions do not create or strengthen dominant companies. In my view one should not combine other considerations with these procedures.
The best position would be to open access to data for as many developers as possible to innovate
Clearly crafted rules on fair process and limits of powers are very important, but development of these is at varying stages across different jurisdictions. At times, some authorities slow the pace of merger reviews, using the prolonged time as a hold-up tactic to seek unrelated or unreasonable commitments from companies, which make the process more difficult. In practice, there is no judicial review of such situations because market circumstances will normally force the acquirer either to reach an agreement or to abandon the transaction, in which case the acquirer will not appeal.
One way to fix this would be to have clear rules on reasonable time limits for decisions that could not be arbitrarily extended by investigating authorities. Some jurisdictions have these safeguards in place already but not all. I would also hope for more administrative (ex officio) supervision over merger control processes. There is essentially none today what I can see. The only way to subject a merger control process to review is to go to court, which today only happens in the rare event that companies appeal after decision.
What recent changes and developments have you seen that have been significant for you, and that will have either a welcome or unwelcome effect on the market?
The most significant change in recent years has been the rise of China as a major antitrust enforcer. For many western lawyers it has been a case of learning by doing, in order to understand how the Chinese system works.
China applies competition laws somewhat differently to western jurisdictions, stemming from differences in economic and judicial systems as well as culture and these can often be fairly fundamental. Foreign companies can have a good collaboration with China so long as they understand and accept the fact that the Chinese system works differently. That is not to say that there is not room for improvement in China, for example by speeding up its merger review process. But this applies not just to China but also a number of other jurisdictions.
What impact does merger control have on encouraging competition in the mobile sector, has it been successful and what changes would you like to see?
Overall I think that merger control has been successful in the mobile sector. The markets are very dynamic and there has rightly been fairly little intervention. When the world is changing fast it is important that merger control analysis should follow the same pace. In some jurisdictions the review process includes much unnecessary paper work which seems to add no value to the actual review. Sometimes notification forms need to be completed solely for the sake of process. Some authorities would be well served by taking a long, hard look at their processes and asking if all the information is really needed. From a company's perspective, it would be helpful to be able to focus solely on true competition issues and avoid unnecessary formalities and paper work.
Nokia merged with Alcatel-Lucent in 2016, what are the key challenges for companies engaging with competition authorities in different jurisdictions and seeking clearance in highly regulated sectors?
The key challenge in most transactions is whether the merger review process will finish on time and with a positive outcome. Should there be a true competition issue in a transaction, it should generally be easily identified by the legal team in advance of the review, in which case they can be prepared to address any concerns on time. A bigger problem is when there is a lot of unpredictability around a merger review. This could emerge from unclear process rules, for example delays that cannot be predicted or from the test for intervention being unclear or dependent on national interests. When merger control rules are not applied consistently, it becomes very difficult to predict how successful one will be in getting clearances and how long the processes will last. This exposes companies to increased risks.
Some authorities slow the pace of merger reviews, using the prolonged time as a hold-up tactic
Also the fact that more and more countries have introduced merger reviews has brought along a practical challenge. It is not easy to manage 20-plus parallel investigations around the world simultaneously. In the Alcatel-Lucent transaction, we had over 300 people contributing to the reviews on the Nokia side. Additionally, Alcatel-Lucent had its own team. This is a lot to manage over such a short period of time.
Some jurisdictions will trigger merger reviews even if no significant activity will transfer in such countries. This is because the filing thresholds may be based on global turnover or they may be very low to capture completely harmless transactions. This is a further point for countries to consider whether it adds value to maintain such systems. In my view, purchaser and target should both need to have a physical presence or turnover in the relevant jurisdiction for a review to make sense.
What advice would you give to lawyers seeking a clear path to merger clearance approval?
That you make sure you have the company's best business people involved in the project team and ready to react to questions at all times. You must be prepared to react quickly if issues emerge. You must work locally in each jurisdiction to capture local differences, be ready for surprises and prepare your management well. Lastly, you must work closely with the transaction team to optimise the schedule for the overall transaction.
The views expressed in the interview are personal to Jenni Lukander and do not necessarily represent the views of Nokia.
|About the author|
Jenni Lukander leads global litigation and competition law at Nokia, reporting to Nokia's CLO. Her expertise as group antitrust counsel, operating at the complex intersection of IP and competition law has been invaluable in working with antitrust authorities and helping to develop Nokia's approach to fair, reasonable, and non-discriminatory terms (FRAND), widely recognised as best practice. She has defended Nokia against a number of patent abuse complaints, with none upheld.
In recent years, Lukander has led large scale merger control projects, including for the acquisition of Alcatel-Lucent and the divestment of Nokia's Devices & Services business to Microsoft, which included reviews of Nokia's patent licensing practices. Lukander continues to oversee competition law compliance and in October 2016 her role was expanded to include leadership of all litigation, including patent matters.
Before joining Nokia in 2007, Lukander practised as an attorney, advising clients on competition law across a number of industries. She holds a master of laws degree from Helsinki University (1999).
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